The Abbott Government's policy gymnastics - RN Drive with Waleed Aly

Posted by Andrew Leigh Mp48sc on December 11, 2014

One of the highlights of this parliamentary year has been joining Waleed Aly on RN Drive for our regular political panel. Before he heads off for new adventures, I joined him one last time to talk about the government's recent policy backflips on the UN Climate Fund, the GP tax and the upcoming deficit in the mid-year budget update. Here's the transcript:

WALEED ALY: So it's 11 minutes past 6. Josh Frydenberg is the Parliamentary Secretary to the Prime Minister and he joins me along with Shadow Assistant Treasurer Andrew Leigh. Sadly he's only on the phone today, but I'm sure he'll be no less pugnacious for that fact. Thanks for coming in, or being on the phone, guys, good to have you with us.

JOSH FRYDENBERG, PARLIAMENTARY SECRETARY TO THE PRIME MINISTER: Nice to be with you, Waleed.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good to be here, Waleed.

ALY: [On the UN Climate Fund] First we were not going to contribute; now we are.

JULIE BISHOP, MINISTER FOR FOREIGN AFFAIRS: I have been tasked by the Australian Prime Minister Tony Abbott to announce today at this meeting that Australia will pledge a contribution of 200 million Australian dollars over four years to the Green Climate Fund.

ALY: Yes, that was Foreign Minister Julie Bishop. As you can hear there, there was much applause and merriment and much confusion because the government had previously told us this was impossible, it was a bad idea, it was a Bob Brown sort of an idea to contribute to a climate change fund of this sort; and all of a sudden $200 million. Why the change of heart, Josh? This is an outrage.

FRYDENBERG: Well this is a good outcome isn't it? Here we are...

ALY: It was a bad outcome a couple of weeks ago.

FRYDENBERG: Here we are, an Australian Government investing $200 million of taxpayers' money in a fund which will help mitigate the impact of climate change and go towards various measures in our region, which is the crucial part here.

ALY: When did it become a good idea?

FRYDENBERG: Well I have always believed, and so has the government, that investing in climate mitigation strategies and processes and projects is a good idea. It's been part of our aid program – we’re in Kiribati; we're in Vanuatu; we're doing work in Indonesia and Kalimantan and other areas; and we even have funded the climate innovation centre in Vietnam. So we have constantly done these sort of programs and now with this additional $200 million commitment we'll see more in our region and I think that's what we want to emphasise.

ALY: ‘A Bob Brown bank on an international scale’ – Tony Abbott never compliments Bob Brown, that is never used as a statement that something is a good idea. So I ask again, when did this fund become a good idea?

FRYDENBERG: Well I think we've now got assurances that the money can be spent in our region, which is very important. We hosted, back in, I think, November, here in Australia – in Sydney – a rainforest initiative; when we were last in government we were working to preserve the rainforests in our region. This money will be going to similar type projects.

ALY: You're not going to answer my question are you?

FRYDENBERG: Well I'm saying this a good commitment, this is a good fund, this should be welcomed by people like you and the listeners to your program, rather than being so cynical of why it was done.

ALY: You paused over the adjective for my programme there, I'm not sure if I should be offended. Andrew, I'm...

FRYDENBERG: Only positive!

ALY: I'm having a lot of fun with this, being all cynical about it. But cynicism aside, this has to be a welcome development, doesn't it?

LEIGH: It's certainly welcome Waleed, despite the fact that we only need to go back a bit over a fortnight to find the Abbott Government rubbishing this idea. They were left out in the cold in the G20 when even Canada said that it was going to make a contribution to the climate fund. I think Australia is in a parlous state with climate change. The latest OECD report confirmed that we're the highest per capita emitter in the OECD, and on the climate change performance index, we've sunk to the bottom.

ALY: Right, but we have seen the government kind of a do a few mea culpas this week, this clearly seems to be another one of them. We can say that we're in a bad position now, we can also acknowledge that we're heading in the right direction can't we?

LEIGH: It's absolutely welcome that the government that has made this commitment but let's be clear Waleed, that just brings them into step with the rest of the developed world.

ALY: Ok, well a question I want to put to Josh Frydenberg, but I want to ask you about this first Andrew: this is money that's coming out of foreign aid budget. I'm a little suspicious of this trick because – and I think it's a bipartisan trick so if I can get you to reflect perhaps more broadly: what is it about political culture, Andrew, that means that we can so easily take money out of foreign aid and pretend we're doing something that's beneficent in a way, as the previous Labor Government did by reassigning money for its asylum seeker policies and reclassifying it as foreign aid?

LEIGH: Waleed, that's simply not right. Aid, total aid either as a share of national income or in dollar terms, increased every year under Labor. Labor did not cut foreign aid. At certain points such as during the Global Financial Crisis we slowed the growth in foreign aid, but that's in complete contrast to this government which is constantly taking from the poor to give to the rich. So Waleed, they have found a billion dollars to give away to multinationals, but they're taking from not only the poorest in Australia but also the poorest around the world, cutting into programs for the sanitation that improves the lives of children through providing them simple vaccinations.

ALY: Do you deny the claim I made before, that I specifically remember interviewing Bob Carr about, that things were being reclassified as foreign aid that previously had never been called foreign aid and thereby was a kind of de facto cut.

LEIGH: It's true that we went back to using foreign aid for the onshore sustenance of refugees, it had been done before but I was not comfortable with that decision that we made. So I think that's a fair criticism but you've got to look at the big picture on this Waleed; aid under Labor doubled, aid under the Coalition has fallen significantly.

ALY: Josh Frydenberg, we're going to speak to the leader of Kiribati in the next hour of the program and I wonder what he will have to say about the fact that we give with one hand and take with the other?

FRYDENBERG: I don't think we do that at all, we've got a $5 billion aid spend, that's a significant amount of money. There'll be some people in Australia who want it to be higher; there will be some people who'll want it to be lower. But what we're doing in terms of these climate mitigation strategies coming out of the aid budget is actually consistent with what previous Liberal and Labor governments have done. I mean, we're supporting a whole range of projects – whether it’s around land degradation, biodiversity, other climate change issues, contributing to the global environmental facility which has nearly four thousand projects around the world in developing nations, giving support – we give $93 million to that facility. I mean, we do a lot of good things through our aid project, our aid budget, and that's how it should be.

ALY: Right, but we're not expanding this aid budget at all this money that is going into the climate change fund is not an extra cent that comes out of Australian coffers. It's just that we're going to take part of our aid budget and call it climate change spending.

FRYDENBERG: No, because it's actual money that is there for purposes like this. For important projects, particularly that can be spent in our region. It's a big spend, it's $5 billion, all of that is not previously allocated, so there is capacity for a commitment such as this.

ALY: So there's $200 million that was going to be spent on other foreign aid projects that will now not be spent on other foreign aid projects?

FRYDENBERG: Well like I said, it's a $5 billion spend that can be allocated in various ways. That $200 million is not being taken from a specific project and now put to this new fund, it's about money that is yet to be allocated for specific purposes.

ALY: All right, let's go to the GP co-payment and the revising of that policy. Andrew Leigh, I want to start with you on this. What exactly is Labor open to considering about this new proposal and what is it implacably opposed to?

LEIGH: We believe in the universality of Medicare, Waleed, and as best I can tell, the government is not changing its policy. Under their old proposal they were going to raise the fee to go to the doctor, so patients would pay more. Under the new proposal they're going to cut the amount that the pay to doctors, so patients will pay more. Now, putting aside the "no cuts to health" promise that the Prime Minister made before the election, this is surely the same set of symptoms, and therefore it's the same disease.

ALY: Well, except that the criticism or the claim that this hit the most vulnerable clearly is no longer true, is it? Because of the revisions they've made about which people are going to be exempt from this co-payment.

LEIGH: I don't think that anyone would argue that someone who is a few bucks above the healthcare card cut off is doing it easy. Many people find it tough to find the money to get kids to go to the doctor; particularly as often happens in our household with three little boys, you get illnesses that strike everyone at the same time. We're comfortably off but for a family with a few kids when everyone gets ill, that money adds up fast and people in my electorate will often comment to me that there seems to be more months than money. This government's making that harder rather than easier.

ALY: So how do you propose to make sure that Medicare can survive into the future as a financially sustainable operation, given that we have in the medium to the long term – and this is by consensus – we have budgetary pressure, we have a budgetary problem here.

LEIGH: We do, but we have a first class system in Medicare which does a good job of containing costs. If we look at explosions in cost, you look at something like the Private Health Insurance Rebate, which was the fastest growing single area of expenditure in the budget. That's why Labor, under the opposition of the Coalition, chose to means test that program. Medicare is fundamental to Australia, it's a great part of the Whitlam legacy and this government is now trying to do with its GP tax what it did with its fuel tax, having been unable to get it through the parliament, which is to find a sneaky back door way of implementing another broken promise.

ALY: Josh Frydenberg, I've got a bit of confusion about this policy, because on the one hand we need to make Medicare sustainable, so we're going to have to cut back effectively the amount of spending we do on it. We've got all this debt, we've got to pay the debt and we're going to put it in a fund that has nothing to do with paying off debt. And that fund might be great, but it has nothing to do with the problem, the emergency we're trying to deal with. So what exactly is the thinking here?

FRYDENBERG: Well, there's two points. I think this is really a revamped and positive outcome in terms of this new policy that has been announced by the Prime Minister and Peter Dutton. What we have done here is assured money will go into the medical research future fund, up to $20 billion, after which it goes into consolidated revenue.

ALY: That's about what, 12 years or something, to get us to that point?

FRYDENBERG: It's going to take a few years, but then the other point is that we are sending a price signal because we are creating an optional co-payment for non-concessional patients who are over the age of 16.

ALY: So you're cutting the health budget effectively and asking doctors to make up the shortfall?

FRYDENBERG: Well we're saying that people who aren't on the concession card, and eight million Australians are, people who are not pensioners, people who are not veterans, people who are not in residential aged care facilities where they get this particular treatment, and people who are not under the age of 16, they will now be asked in some cases, if the doctor decides, to pay this extra $5. I think that's a good outcome, particularly when you bear in mind that today our Medicare spend is around $20 billion and in ten years’ time it goes to $34 billion and ten years ago it was at $8 billion. So we were very conscious of that, now we have a price signal when it comes to the PBS co-payment and Andrew's side of politics supports that. Bob Hawke when he was in government proposed a Medicare co-payment.

ALY: He got rid of it very quickly.

FRYDENBERG: I think, no Paul Keating rolled him, and then got rid of it.

ALY: Well, because it was unpopular, people realised it wasn't good policy.

FRYDENBERG: But if we are going to be serious about this broader fiscal challenge that we face, if we're going to be serious about medical research too, Waleed – and there'll be a lot of people listening to your show who support medical research because the proof is and the evidence is that for every dollar invested in medical research there's $2.17 worth of benefits to the community. If we're going to be serious about playing to our strengths in medical research, if we're going to be serious about a price signal for an escalating cost, namely Medicare, then I think a reform like this, a modest $5 optional co-payment for people who don't fall into all those other categories of lower socio-economic backgrounds, I think that's a good outcome.

ALY: But you're pulling in three directions here. You're saying fiscal responsibility and medical research and price signal.

FRYDENBERG: Yes, and I'm happy with that.

ALY: These are not coherent.

FRYDENBERG: Well, I'm trying to make them coherent because I think we needed some sort of policy response, now clearly our...

ALY: Do you want to stop people going to the doctor, or do you want to fund medical research, or do you want to pay debt?

FRYDENBERG: Clearly the Labor Party here is playing politics, because even this modest reform is not being supported by them. Now, they said last time they didn't like the fact that money was going into a future fund, into a research future fund, they said before that they didn't like the fact that people who're from lower socio-economic backgrounds weren't exempted. Well, we've made some adjustments and we've ensured that the group of people, the cohort of people who will now be affected by this optional co-payment are in a position to pay. I think that is a good outcome and we have to take these sort of measures if we're going to prepare for tomorrow. This is what our big job is, by the way, going into 2015, to probably better explain our case to the Australian public because we were saddled with a huge amount of debt...

ALY: Which we're now not paying back because...

FRYDENBERG: …We are also saddled with demographic challenges, and if we are going to deal with these issues then reforms like this, which by the way do go into consolidated revenue after $20 billion, I think we've got a good outcome.

ALY: All right, Andrew Leigh, why is it different for pharmaceuticals?

LEIGH: Well Waleed, going to the doctor is absolutely fundamental – not just for you not getting sick but for you not passing your sickness onto me. We all benefit from a healthier community, and one of the great things about popping into a GP regularly is that the GP will often notice that something else is wrong. When you stop people from getting primary health care it ends up being more expensive down the track. We know that we've got reports that more people will end up in emergency rooms if you deter people form primary healthcare. Josh talks about medical research, and I'm all for medical research, but it shouldn't be funded by a tax on the sick.

ALY: Right but, answer my question about the pharmaceutical element of it. Great I can go get cheap primary healthcare, but I get prescribed medication I then can't afford. Why is that better?

LEIGH: Well seeing a doctor is, I think, the cornerstone of a healthcare system, Waleed.

ALY: Even if I can't afford the treatment that they give me?

LEIGH: Well what we provide is, we provide heavily discounted pharmaceuticals but we don't put any barriers in the way of someone going to see a doctor.

ALY: Aren't we providing heavily discounted access to the doctor if they're paying a co-payment as well?

LEIGH: Well it's still putting a barrier in the way.

ALY: But there's a barrier to the pharmaceutical, why the difference?

LEIGH: Well, when I've chatted to medical practitioners they see this as being the most important. Talking to doctors in my local electorate, particularly those operating the Winnunga Nimmityjah Health Care Clinic in the South of Canberra, they talk particularly about the barriers that this could have for Indigenous patients.

FRYDENBERG: But you personally supported this Andrew, in previous writings.

ALY: Here we go; we're going back to the vault, are we?

LEIGH: We can go through this for the fifteenth time. Eleven years ago I wrote an opinion piece; I've changed my mind and I've changed my mind because I've spoken to the experts on this. I just urge the government to do exactly the same. They were claiming yesterday that they'd spoken to the AMA about this and the AMA Deputy Vice-President came out very quickly to say ‘we got a phone call thirty minutes before the announcement but we didn't get consultation’. These guys are cutting the consult fees, they're pretending they're doing consultation but frankly it's a joke.

ALY: Well the AMA did confirm they hadn't been consulted on this program as well. By the way, how are the royalty cheques going for all those writings that have been cited in parliament?

FRYDENBERG: I don't think he's selling many books to his colleagues, that's for sure.

LEIGH: I'm more concerned about what Tony Abbot said when he was campaigning to be Prime Minister last year than I am about what I wrote when I was a university student.

ALY: Dexterously avoided. I'm not going to talk about Paid Parental Leave because the fact is, Josh, you're going to tell me that we're thinking about it and give me no details, so let's just move on from that. I do want to talk though about MYEFO. Deloitte Access Economics are forecasting for 2014-15 a deficit of $34.7 billion, which is $4 billion worse than what we were told in the most recent forecast back in May, which was $29.8 billion. No surplus before 2018-19, that will not be helped at all by the co-payment situation because as I say, it's not paying off debt in the interim and you've got rid of significant revenue streams. This is now a deficit of your making; this is now a deficit that is your problem.

FRYDENBERG: Well quite clearly you haven't read Chris Richardson from Deloitte Access Economics' full statement because when he talked about MYEFO and the upcoming numbers, he did say only the Coalition provided a pathway back to surplus.

ALY: He didn't say it was the only pathway he could conceive of, he didn't say...

FRYDENBERG: Hang on, Waleed, come on now. You are avoiding the admission that here was Chris Richardson, an expert in his field with no political axe to grind, saying that the Labor Party were being opportunist and populist and were opposing everything, where as we were at least having the courage of our convictions.

ALY: I'm not avoiding that at all, I'm just saying it's not the question I'm asking. Which is that this is a deficit that you have contributed to.

FRYDENBERG: Well, the problem is on the revenue side as well as on the spending side. On the revenue side, iron ore prices have fallen by 35 per cent since May, this is $9 billion in our revenue projections just over the next couple of years. Australia is set to become the largest LNG exporter in the world by 2017, overtaking Qatar, and what's happened? The oil and gas prices have fallen dramatically, this hurts us. On the expenditure side, $28 billion worth of spending cuts that we have proposed, including $5 billion that Labor took to the last election, are being blocked by our political opponents in the Senate.

ALY: I understand this argument. But at the same time you've gotten rid of billions of dollars in revenue in a carbon tax, you will not look at other forms of revenue to do with superannuation for example, you're closing off options. This is now a deficit that is partly a result of your policy settings.

FRYDENBERG: Well, we are trying to deal with the situation as best we can, which involves a number of new savings which are running into interference in the Senate. On the revenue side there are things that are beyond our control, and you are right this is not a good situation to be in without budget surplus forecast being pushed out even further. Let's see more in MYEFO, but it has to be said if we had more co-operation in the Senate for our budget and the savings that that involved, we would be in a better position than we look like we are.

ALY: I'm looking forward to MYEFO greatly. Andrew Leigh, do you acknowledge that while there are certain decisions the government has made that have exacerbated this, there are none the less obstructions in the way that would really help deal with the deficit?

LEIGH: Waleed, the starting point is that even if Parliament simply rubber-stamped the budget, the deficit would be bigger not smaller than when the Government came to office. That's because as you've said they refused revenue from the carbon price, they gave money back to multinationals and back to people with more than $2 million in their superannuation accounts. The result now is that we have an economy which is languishing; the Westpac-Melbourne Institute Consumer Sentiment Index just fell again. Westpac's chief economist calls it a very disturbing result and says there's ongoing disillusionment about the May budget. The experts are clearly pointing to the decisions the government made as having hurt confidence, and part of that is when you take from the poor to give to the rich you're taking from people who spend all their incomes to people who save part of it, so that really hurts consumer confidence.

ALY: I understand your argument. Josh is very angry, he's punching the air here, so I just want to give him a very quick rebuttal.

FRYDENBERG: I'm just saying that actually some of the economic indicators are not as negative as Andrew just points out. Housing starts are up in terms of consumer confidence and retail spending; it's the fifth month on record that they've consecutively gone up. New business registrations, particularly for small business after 500,000 were lost in the Rudd and Gillard years, this is also up somewhere near 100,000. So we are seeing some very good stories, and we're also in our 23rd year of consecutive economic growth.

ALY: All right, well we'll see how good those stories ultimately end up. Being I'm well over time, producers are screaming at me; kind of in the way that you guys would like to scream at each other, I'm sure.

FRYDENBERG: No, not at all.

ALY: Well, I better wrap up. But this promises to be the last time I will have the chance to speak of both of you in at least in this format.

FRYDENBERG: Oh no.

ALY: But what I'm going to do, I'm putting an invitation to both of you right now. My final show on RN Drive will be in the lobby at the ABC in the foyer at the Melbourne studios in Southbank. You are both invited to come along and perhaps talk about a special topic of interest that has nothing to do with politics, are you in Josh?

FRYDENBERG: As long as it's not New Year's Eve, I'll be there.

ALY: All right, Andrew can you make it to Melbourne to have a chat?

LEIGH: I would love to Waleed but I've had a clashing commitment next Thursday. Might I be able to nominate one of my Melbourne colleagues to do it?